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What is the economic impact of employee wellbeing?

A new study has estimated that high mental wellbeing was associated with $1,779 to $2,351 worth of productivity per person. Whereas moderate mental wellbeing was associated with $1,271 to $1614 worth of productivity per person. Further, each point increase in mental wellbeing was associated with $83/$105 in lower productivity loss per person.


The results indicate that improvements in mental wellbeing could generate a positive return on investment in the very short term. An intervention costing $81-$103 per individual per year and generating a one-point increase in mental wellbeing, would appear to be cost neutral, but with improved mental wellbeing among workers.


Extrapolated to a population of 2.7 million people, when compared to low mental wellbeing, moderate mental wellbeing was associated with lower productivity loss amounting to $2.3bn-$2,9bn, while high mental wellbeing was associated with lower productivity loss amounting to $0.9bn-$1.3bn. As such, the authors argue the potential return on investment for programs and policies that promote mental wellbeing is sizable and financially well worth the effort. Most interventions focus on treating and preventing mental ill-health. This study suggests there are substantial gains to be made by promoting mental wellbeing across the population.


This new paper adds to a growing body of evidence which highlights the significant gains to be made through promoting employee wellbeing. Previous research has shown that businesses which invest in mental wellbeing initiatives can expect a 4-8-fold return on their investment within a year. Wider research has found employees would be willing to take a 10% pay decrease in return for a higher levels of wellbeing.


The main mechanism through which increasing mental wellbeing can deliver substantial economic rewards is through decreasing the number of sick days which employees need to take. Research has found that improving mental wellbeing results in employees spending significantly fewer days absent. Other researchers have discovered that improving the work environment can help to reduce staff sickness by around 30%.


There are also a range of other related cost outcomes pertaining to productivity which this study was unable to account for. These include job performance and production output, career development and skill acquisition, unpaid work, and staff retention. This suggests that the return on investment highlighted in this study may be conservative and the actual return on investment could be even greater.

Sources

  1. Santini, Z. I., Thygesen, L. C., Koyanagi, A., Stewart-Brown, S., Meilstrup, C., Nielsen, L., ... & Ekholm, O. (2022). Economics of mental wellbeing: a prospective study estimating associated productivity costs due to sickness absence from the workplace in Denmark. Mental Health & Prevention, 28, 200247.

  2. Bealing, M. (2021). Wellbeing and productivity at work. wellington.

  3. McDaid, D., Zechmeister, I., Kilian, R., Medeiros, H., Knapp, M., Kennelly, B., & WHEEN Group. (2008). Making the economic case for the promotion of mental well-being and the prevention of mental health problems. London School of Economics & Political Science.

  4. Sears, L. E., Shi, Y., Coberley, C. R., & Pope, J. E. (2013). Overall well-being as a predictor of health care, productivity, and retention outcomes in a large employer. Population health management, 16(6), 397-405.

  5. Mathisen, J., Nguyen, T. L., Jensen, J. H., Mehta, A. J., Rugulies, R., & Rod, N. H. (2022). Impact of hypothetical improvements in the psychosocial work environment on sickness absence rates: a simulation study. European journal of public health, 32(5), 716-722.

  6. Keyes, C. L., & Grzywacz, J. G. (2005). Health as a complete state: The added value in work performance and healthcare costs. Journal of Occupational and Environmental Medicine, 523-532.

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